🚀 Event Review
Recently, the ETH market experienced a wave of intense volatility. The market sentiment took a sharp downturn starting from the moment the Federal Reserve announced a 25 basis point rate cut and the end of its quantitative tightening (QT) plan. The announcement mentioned internal disagreements within the FOMC regarding the extent of rate cuts, and the lack of data caused by the government shutdown further fueled investor uncertainty about future liquidity and inflation trends. This prompted institutions and algorithmic trading systems to quickly adjust their positions. Within just a few minutes, the price of ETH rapidly dropped from around $4013–$4017 to as low as the $3836–$3880 range. After some capital returned to the market, there was a slight rebound, and the current price is around $3926.36.
⏰ Timeline
- 02:00: The Federal Reserve released an announcement, stating that the federal funds rate would be lowered by 25 basis points, bringing the target range down to 3.75%–4%. It also revealed that the balance sheet reduction plan would end on December 1. At this time, the price of ETH was around $4013–$4017, marking the starting point of the subsequent sharp decline.
- 02:00–02:40: The market entered a state of heightened risk aversion, with some institutions and algorithmic systems quickly liquidating positions due to liquidity risk, causing ETH prices to plummet. Some data recorded a drop of 3.42% to 4.40%, with key technical support levels being breached.
- 03:05: After a round of intense volatility, some buying gradually entered the market, showing signs of a slight recovery in sentiment, and the price of ETH rebounded to around $3926.36.
🔍 Cause Analysis
Uncertainty in Macro Policy and Economic Data
The Federal Reserve's announcement of a rate cut and the end of the balance sheet reduction plan signaled a shift away from the long-term rate hike cycle, but there were clear divisions within the FOMC. Some officials advocated for a larger rate cut, while others preferred to keep rates stable. Additionally, the lack of official economic data due to the government shutdown increased uncertainty about future market liquidity and inflation. As a result, investors generally chose to avoid risk and withdrew from risk assets.Market Liquidity Risk and Ultra-Short-Term Liquidation Effect
After the core news was released, large institutions and algorithmic trading systems quickly adjusted their positions, leading to a series of large sell orders and automatic liquidations. Since ultra-short-term funds were highly concentrated, once key support levels were breached, it triggered a chain reaction of liquidations and panic, which was a major reason for the sharp drop in ETH prices within a very short period.
📊 Technical Analysis
This technical analysis is based on Binance USDT perpetual contract 45-minute candlestick data, analyzing the ETH/USDT trading pair. The main indicators and conclusions are as follows:
- Bollinger Bands and Rebound: The price once rebounded from the lower Bollinger Band, suggesting a potential short-term buying opportunity.
- KDJ Indicator: A clear death cross and indicator convergence appeared, providing a warning signal for a short-term downward reversal.
- OBV Indicator: The OBV crossed above its moving average, showing an initial buy signal, but it needs to be considered together with other trend indicators.
- Moving Average System: The current ETH price is below the MA5, MA10, MA20, MA50, and EMA5/10/20/50/120 moving averages, with all moving averages in a bearish alignment, indicating that the overall downtrend remains strong.
- Liquidations and Large Transactions: In the past hour, the total liquidation volume across the network reached $10 million, with long positions accounting for 69%. The main net outflow was about $30 million, indicating abnormal capital movements during intense volatility and high short-term risk.
Overall, although some technical signals (such as OBV moving upward and TD price reversal) may indicate some capital inflow, the overall moving average system and trading volume still show clear bearish signals.
🔮 Market Outlook
In the short term, due to the impact of macro policies and liquidity risks, the market may continue to experience fluctuations and volatility. Although some capital has already entered to cover positions, with the overall bearish forces remaining strong and the moving averages tightly aligned, ETH still faces downward pressure in the short term. In addition, institutional movements and large capital flows will be important indicators for observing future trends.
In the medium to long term, as the market gradually digests the effects of policy shifts, if there are clear signs of global economic recovery and improved liquidity, ETH may see a trend reversal after some time. However, during this period, investors should remain highly cautious, pay attention to technical support levels and changes in macroeconomic data, adjust positions in a timely manner, and avoid sudden liquidation risks.
Overall, this round of intense volatility demonstrates the vulnerability and high volatility of the crypto market under the dual influence of macro policies and technical factors. Investors should remain highly vigilant to risks and pay attention to subsequent market signal changes.
